Sweden Monetary Policy

Sweden: Riksbank leaves repo rate steady at 1.00 percent in April

April 17, 2013

At its 17 April monetary policy meeting, the Central Bank (Riksbank) left the repo rate unchanged at 1.00% for a second consecutive meeting, a decision that was in line with market expectations. According to the Bank, "the repo rate needs to remain at a low level for a longer period of time to support the recovery to ensure that inflation rises towards the target". Four out of six members of the Riksbank's Executive Board voted in favour of leaving the repo rate unchanged at 1.00%, outvoting two other members who advocated lowering the policy rate.

Riksbank pointed out that global economic growth is relatively healthy, underpinned by the continuing economic recovery in the United States and a robust performance of Asian economies. On the other hand, the Central Bank considers that the crisis in the Eurozone remains the biggest downside risk to the economic outlook. At a domestic level, the Bank stated that the Swedish economy is showing signs of a gradual recovery, after a weak performance at the end of 2012.

Regarding price developments, Riksbank acknowledged that inflationary pressures remain subdued due to weak internal demand as well as a stronger Swedish krona. Indeed, the Bank expects inflation to remain below its 2.0% target this year and the next.

Riksbank projects the average repo rate to remain at 1.00% in both 2013 and 2014. FocusEconomics Consensus Forecast panellists see the repo rate at 0.95% by the end of this year. For 2014, panellists expect the policy rate to rise to 1.30%.

Total industrial production excluding energy rose a seasonally-adjusted 0.8% in December over the previous month according to Statistics Sweden (SCB), down from November’s revised 1.0% increase (previously reported: +0.9% month-on-month).

Total industrial production excluding energy rose a seasonally-adjusted 0.9% in November over the previous month according to Statistics Sweden (SCB), down from October’s revised 2.0% rise (previously reported: +1.9% month-on-month).